ONLINE DISPUTE RESOLUTION - FOR LOW VALUE CIVIL CLAIMS Online Dispute Resolution Advisory Group

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ONLINE DISPUTE RESOLUTION - FOR LOW VALUE CIVIL CLAIMS Online Dispute Resolution Advisory Group
ONLINE DISPUTE
  RESOLUTION
FOR LOW VALUE CIVIL CLAIMS
 Online Dispute Resolution Advisory Group

              February 2015
ONLINE DISPUTE RESOLUTION - FOR LOW VALUE CIVIL CLAIMS Online Dispute Resolution Advisory Group
Contents
 Foreword from the Rt Hon Lord Dyson 3
 Introduction and overview5
 1. Context6
 2. Recommendations - Summary8
 3. The case for ODR10
 4. Examples of ODR in action13
 5. Rethinking access to justice19
 6. Principal recommendations in further detail21
 7. Pilots24
 8. Future systems26
 9. Policy and legal issues28
 10. Next steps30
 Appendix 1 - Terms of reference32
 Appendix 2 – Members of ODR Advisory Group33
 Appendix 3 – Summary of website34

                                                     Contents

                                                       1
Foreword from the Rt Hon Lord Dyson
Chairman of the Civil Justice Council and Master of the Rolls

This is an important and timely report, and I am very grateful to Richard Susskind and the members
of his CJC working party for this work, and for producing an exciting and important report. I believe
that it will act as a catalyst for far-reaching reforms to our civil justice system.

There is no doubt that online dispute resolution (ODR) is an area with enormous potential for meeting
the needs of the system and its users in the 21st Century. Its aim is to broaden access to justice and
resolve disputes more easily, quickly and cheaply. The challenge lies in delivering a system that fulfils
that objective.

This report illustrates a number of areas where ODR is already successfully in use, both in this country
and internationally. At a time of major pressure on public spending and high legal costs, ODR offers a
major opportunity to help many people for whom public funding to resolve disputes is not available, or
for whom legal costs are prohibitive.

ODR is also in harmony with wider changes in society, in particular the advances in technology and
the large scale use of online services to transact all forms of business. The courts have some catching up
to do with other areas of business and Government.

It is important that we get this right. A system linked to the court service would provide reassurance
for all users.

There will be a lot of work to be done, but I have no doubt that ODR will play an important role in
the future of civil justice. This report is a very important first step in that process, and I welcome its
publication, and the CJC’s association with this work.

                                                                                                             Foreword by Master of the Rolls

                                                                                                                       2
Introduction and overview
In this report, we call for radical change in the way that the court system of England and Wales handles
low value civil claims. We strongly advocate the introduction of online dispute resolution (ODR). In
summary:

• For low value claims, we are concerned that our current court system is too costly, too slow, and
  too complex, especially for litigants in person.

• To overcome these problems, our main recommendation is that HM Courts & Tribunals Service
  should establish a new, Internet-based court service, known as HM Online Court (HMOC).

• On HMOC, members of the Judiciary would decide cases on an online basis, interacting
  electronically with parties. Earlier resolution of disputes on HMOC would also be achieved –
  through the work of individuals we call ‘facilitators’.

• We predict two major benefits would flow from HMOC – an increase in access to justice (a
  more affordable and user-friendly service) and substantial savings in the cost of the court system.

• ODR is not science fiction. We present a series of case studies from around the world that clearly
  demonstrate its potential.

• We argue that to improve access to justice, it is vital not just to have better methods of resolving
  disputes but also to have effective ways of avoiding and containing disputes. ODR can help here.

• The technology underpinning ODR is evolving rapidly. We make a series of predictions about
  the likely capabilities of later generations of ODR system.

• Our Group would be pleased to work closely with HMCTS in a new phase of work, that should
  focus on piloting the proposals in this report.

I am extremely grateful to the Master of the Rolls, Lord Dyson, and to the Civil Justice Council (CJC)
that he chairs, for supporting the work of the ODR Advisory Group. I am also greatly indebted to all
                                                                                                             Introduction and overview

members of the ODR Group itself (see Appendix 2), who devoted much of their spare time to this
report. Many others assisted us. I extend my thanks particularly to Harvey Briggs, Annalise Curry, Aled
Davies, Peter Elkin, Tessa Shepperson, and Darin Thompson. We have also been helped by the work
of the Austerity Working Party of JUSTICE, chaired by Sir Stanley Burnton. Peter Farr and Andrea
Dowsett, of the Judicial Office, deserve separate mention for so affably keeping us on the rails. Finally,
the ongoing encouragement of Lord Thomas, the Lord Chief Justice, is very much appreciated.

Professor Richard Susskind OBE
Chair of Civil Justice Council’s Online Dispute Resolution Advisory Group
IT Adviser to the Lord Chief Justice

                                                                                                                    3
1. Context
1.1   This is the first report of the ODR Advisory Group of the Civil Justice Council.The group was
      set up on 25th April 2014, with terms of reference that can be found in Appendix 1. In broad
      terms, our remit is to explore the potential of ODR (online dispute resolution) for civil disputes
      of value less than £25,000. The membership of our group is laid out in Appendix 2.

1.2   This report should be read in conjunction with our complementary website, which can be found
      at www.judiciary.gov.uk/reviews/online-dispute-resolution. Our main recommendations,
      arguments, and evidence are set out in this report, while working papers, links to other relevant
      resources, interviews with experts, and materials that are better presented graphically, are provided
      on the website. A listing of the resources available on the website is provided in Appendix 3.

IT and ODR

1.3   IT can be used in support of the court system in two quite different ways. The first involves the
      application of technology to improve what is already in place today. In this way, IT is grafted onto
      existing working practices and so replaces or perhaps enhances current systems. This approach
      tends to be costly, difficult, and, in the end, often delivers ‘mess for less’, that is, it replaces today’s
      inefficient, paper-based processes with IT-based systems. It does not fundamentally change the
      underlying processes and procedures.

1.4   The second use of IT in the courts is to enable the delivery of services in entirely new ways.When
      this is the aim, it encourages new and imaginative thinking and urges reformers to start afresh, with
      a blank sheet of paper. In this report, we take this second approach.We propose new ways in which
      justice can be administered through the use of ODR techniques.This is therefore in contrast with
      many projects that are currently in progress in the civil justice system – those that fall into our first
      category and are seeking to systematize the traditional operation of the courts.

1.5   Our conception of ODR is broader than that of many specialists in online dispute resolution.
      When we speak of ODR we are referring to the use of IT and the Internet to help resolve disputes
      (other than the computerization of the current court system). Our exclusion in brackets means we
      do not consider, for example, that conducting court hearings across video links or online tracking
      of the progress of trials to be ODR. Although we take a wider view of ODR than others, we have
      drawn heavily in our thinking from best practice in mainstream ODR around the world.
                                                                                                                     Context

1.6   When a conflict is handled using ODR, a traditional courtroom or hearing room is not employed.
      Instead, the process of settling a dispute is entirely or largely conducted across the Internet. In
      other words, dispute resolution services are made available as a type of online service. Many
      techniques fall under the umbrella of ODR. Sometimes human beings remain heavily involved,
      as when ODR systems provide facilities for judges, mediators, or negotiators to handle disputes

                                                                                                                       4
by communicating electronically with parties and by reviewing documents in digital form. On
       other occasions, the assessment of a legal problem or the negotiation itself might be enabled by the
       ODR service without much or any expert intervention.

1.7    ODR techniques are already being deployed around the world in resolving a wide range of
       disagreements – from consumer disputes to problems arising from e-commerce, from quarrels
       amongst citizens to conflicts between individuals and the state. ODR is not appropriate for all
       classes of dispute but, on the face of it, is best placed to help settle high volumes of relatively low
       value disputes – robustly, but at much less expense and inconvenience than conventional courts.
       We find that ODR is best explained by example. Accordingly, in Section 4, we provide a set of
       illustrations of ODR in action.

Ambitions of this report

1.8    This report offers a broad statement of direction for the future use of ODR in the civil justice
       system. It is not a detailed blueprint. It is our first word rather than the last word on what we
       believe should be an important new direction for dispute resolution in England and Wales. One
       of our central aims is to raise awareness of the broad potential of ODR. We hope to encourage
       debate and reflection, not about the intricate details of implementing ODR but on the principles
       and implications of handling disputes in the way we propose. Our report is also a call for further
       work – in particular, to pilot the general approach that is recommended here.

1.9    For many lawyers and judges, our recommendations and the contents of the report may appear
       rather alien and even disruptive. Our Group takes the view that radical new solutions are needed
       in these challenging times for the court system. In an era when affordable court service - and so
       access to justice - is under severe threat, we ask of our readers, if not that they embrace a new
       mind-set, then at least that they keep an open mind.We are asking for a willingness to contemplate
       that civil disputes, in the future, may need to be managed and resolved in ways quite unlike those
       embraced by our traditional system. Perhaps the most fundamental question that must therefore be
       posed is this – is court a service or a place? Do we always need to congregate physically in a court
       building to resolve our differences? Or might some of our civil problems be more appropriately
       resolved using one of a number of online techniques?

1.10 The strong view of our Group, and this is a position that has strengthened as our work has progressed,
     is that ODR holds enormous potential to bring two great benefits to our justice system: a lower
     cost court system and an increase in access to justice. In appropriate cases, we are therefore saying
     that ODR can deliver more affordable and accessible dispute resolution.
                                                                                                                 Context

1.11   ODR is not science fiction. Famously, each year on eBay, around 60 million disagreements
       amongst traders are resolved through ODR. This is a well-established way of resolving disputes,
       appropriate for the Internet age. Other jurisdictions, most notably, Holland and Canada, are already
       forging ahead. If, in England and Wales, we aspire to have a court system that leads the way, then
       we already have some catching up to do.

                                                                                                                   5
2. Recommendations - Summary
2.1   Our principal recommendation is that HM Courts & Tribunals Service (HMCTS) should
      establish a new, Internet-based court service, known as HM Online Court (HMOC). We
      recommend that HMOC should be a three-tier service.

2.2   Tier One of HMOC should provide Online Evaluation. This facility will help users with a
      grievance to classify and categorize their problem, to be aware of their rights and obligations,
      and to understand the options and remedies available to them.

2.3   Tier Two of HMOC should provide Online Facilitation. To bring a dispute to a speedy, fair
      conclusion without the involvement of judges, this service will provide online facilitators.
      Communicating via the Internet, these individuals will review papers and statements and
      help parties through mediation and negotiation. They will be supported where necessary, by
      telephone conferencing facilities. Additionally, there will be some automated negotiation, which
      are systems that help parties resolve their differences without the intervention of human experts.

2.4   Tier Three of HMOC should provide Online Judges – full-time and part-time members of the
      Judiciary who will decide suitable cases or parts of cases on an online basis, largely on the basis
      of papers submitted to them electronically as part of a structured process of online pleading.This
      process will again be supported, where necessary, by telephone conferencing facilities.

2.5   The establishment of HMOC will require two major innovations in the justice system of
      England and Wales. The first is that some judges should be trained and authorized to decide
      some cases (or aspects of some cases) on an online basis. The second innovation is that the state
      should formally fund and make available some online facilitation and online evaluation services.

2.6   To ensure the implementation of our principal recommendation, we propose three supporting
      recommendations:
                                                                                                            Recommendation - Summary

      • that HMCTS introduces an ODR stream into its current programme for the reform of
        civil, family, and tribunal work, and allocates a modest fraction of its £75 million annual
        reform budget (over five years) for the establishment of HMOC;

      • that all political parties offer in-principle support for HMOC, as a viable way of
        increasing access to justice and reducing the cost of the resolution of civil disputes; and

      • that the Civil Justice Council invites the ODR Advisory Group to commence a new
        phase of work, collaborating with HMCTS and the Judiciary in formally piloting ODR,
        designing HMOC, and raising awareness of this new approach to the handling of civil
        disputes.

                                                                                                                    6
2.7   Although our terms of reference are restricted to civil claims under the value of £25,000, we
      believe that that the jurisdiction of HMOC should also be extended to suitable family disputes
      and to appropriate cases that come before today’s tribunals.

2.8   The remainder of this report expands on the recommendations of this section and on our
      underlying thinking.

                                                                                                       Recommendation - Summary

                                                                                                              7
3. The case for ODR
3.1      Our civil justice system is creaking. Its many problems have been well stated by others: by senior
         judges from Lord Woolf to Lord Justice Jackson; by numerous academic commentators; and also
         by legal practitioners1. Above all, as public legal funding declines, there is widespread concern
         today that dispute resolution in our courts is disproportionately expensive and insufficiently
         user-friendly for litigants in person.

The challenge facing our courts

3.2      Having reviewed much commentary on the shortcomings of the civil justice system, our Group
         has focused on the challenge of providing a court-based dispute resolution service for low value
         claims that is:

         • affordable - for all citizens, regardless of their means;

         • accessible - especially for citizens with physical disabilities, for whom attendance in court
           is difficult if not impossible;

         • intelligible - to the non-lawyer, so that citizens can feel comfortable in representing
           themselves and will be at no disadvantage in doing so;

         • appropriate - for the Internet generation and for an increasingly online society in which
           so much activity is conducted electronically;

         • speedy – so that the period of uncertainty of an unresolved problem is minimized;

         • consistent – providing some degree of predictability in its decisions;

         • trustworthy – a forum in whose honesty and reliability users can have confidence;

         • focused – so that judges are called upon to resolve disputes that genuinely require their
           experience and knowledge;
                                                                                                                                The case for ODR

         • avoidable – with alternative services in place, so that involving a judge is a last resort;

         • proportionate – which means that the costs of pursuing a claim are sensible by reference
           to the amount at issue;

1        See, for example, Lord Woolf, Access to Justice (1995, 1996), Lord Justice Jackson, Review of Civil Litigation Costs
(2010), Hazel Genn, Judging Civil Justice (2009), and Hodge, Jones & Allen, Innovation in Law Report 2014 (2014).

                                                                                                                                     8
• fair – affording an opportunity for citizens to present their cases to an impartial expert,
        delivering outcomes that parties feel are just;

      • robust – underpinned by clear rules of procedure and fully implementing the law of the
        land;

      • final – so that court users can get on with their lives.

3.3   Although our current court system is populated by first-rate judges whose quality
      of work is very high, our shared view is that our current way of resolving low value
      civil cases in conventional courts fails to satisfy the majority of our thirteen criteria.

A new approach

3.4   The temptation to which many proposed reformers have succumbed in the past is to believe
      that the best way forward in saving costs and increasing access to justice is to streamline our
      existing system rather than change it fundamentally. We suggest that we are unlikely to make
      great strides by automating what we already have in place.

3.5   In respect of the NHS, Sir Muir Gray, an eminent doctor, has observed in conversation that
      ‘we’re not going to change until we’ve run out of money’. We may apply the same sentiment
      to the justice system where many would argue that we have indeed run out of money. If we
      concede, accordingly, that we have to change, we should consider not simply improving our
      court system or even salvaging our traditional ways of resolving low value claims. We should be
      prepared to rethink the way in which society handles civil disputes and problems.

3.6   We submit that ODR offers one promising and fundamentally new approach to the resolution of
      civil disputes. Based on the global experience of successful ODR projects, if well implemented and
      widely used, we believe this technology solution can tick all thirteen of the boxes in Paragraph 3.2.

The economic case

3.7   It is not yet possible to present a fully articulated business case for HMOC. This can more
                                                                                                              The case for ODR

      responsibly be done after some piloting of ODR. But we do believe that two predictions can
      safely be made. First, if we are able to take cases out of the conventional court system and into
      the online environment, then this will reduce both fixed and operating costs. For example,
      the unit costs of civil claims (that is, the cost per individual claim) conducted by judges sitting
      online (from their homes, for instance) will be significantly lower than the costs of judges sitting
      in courts. And, if a large number of disputes come to be resolved by HMOC, this would have
      significant implications for the court estate – there will be a reduction in need for many of the
      current buildings and the land on which they sit. Our second prediction is that the introduction

                                                                                                                   9
of online facilitation (Tier Two) will greatly reduce the number of cases that actually reach
      judges – and the cost of disposing of cases through facilitation should be considerably lower than
      that of judges deciding the cases, whether or not online, because the individuals involved will be
      less senior.

3.8   HMOC will, of course, require robust, secure, and reliable technology on which to run. This
      need not be costly, because there are already standard ODR platforms that can be licensed
      and deployed. We expect that the set-up costs of this and ongoing development costs could
      comfortably be covered by the court fees that parties would pay. We further expect that these
      fees will be lower than conventional court charges. Subject to what we say in Paragraph 9.6
      about setting online court fees at a level that will discourage vexatious use of HMOC, we would
      suggest a charging mechanism that bring savings both for court users and for the court system.

3.9   Even if HMCTS took the view that a bespoke system should be developed to support HMOC,
      this would incur development costs that would be modest in comparison to the current
      expenditure on maintaining and upgrading the current systems. Certainly it would be a tiny
      fraction of the £75 million that is being allocated annually for the next five years for the civil
      justice reform programme.

                                                                                                           The case for ODR

                                                                                                             10
4. Examples of ODR in action
4.1   In this section, we provide a series of illustrations of ODR in operation. We are not endorsing
      or recommending any of the systems. Our purpose instead is to show the way in which ODR
      is actually being used. Presented in no particular order, the examples we have selected are as
      follows:

      • eBay

      • Rechtwijzer 2.0

      • Canadian Civil Resolution Tribunal

      • Financial Ombudsman Service

      • Nominet

      • Resolver

      • Youstice

      • Online Schlichter

      • Cybersettle

      • Modria

      • Traffic Penalty Tribunal

      This selection is by no means exhaustive. There are many more systems up and running
      around the world. We provide a summary of the best known of these on our website.
                                                                                                           Examples of ODR in action

eBay - www.ebay.com

4.2   A remarkable 60 million disagreements amongst traders on eBay are resolved every year using
      ODR. There are two main processes involved. For disputes over non-payment by buyers or
      complaints by buyers that items delivered did not match the description, the parties are initially
      encouraged to resolve the matter themselves by online negotiation. They are assisted in this by
      clearly structured, practical advice on how to avoid misunderstandings and reach a resolution.
      Guidance is also given on the standards by which eBay assesses the merit of complaints. If
      the dispute cannot be resolved by negotiation, then eBay offers a resolution service in which,
      after the parties enter a discussion area to present their argument, a member of eBay’s staff

                                                                                                              11
determines a binding outcome under its Money Back Guarantee. This e-adjudication process is
      fast with strict time limits. The claim must be escalated to eBay within 30 days from the actual
      or latest estimated delivery date and, to encourage a full opportunity for self-resolution, no
      earlier than 8 days since the complaint was first raised with the seller. Disputes over feedback
      (reviews by buyers of sellers), which can include reviews that might otherwise lead to court-
      based defamation claims, are dealt with by an independent company called Net Neutrals. Their
      service is called Independent Feedback Review (IFR). Using a separate discussion space for
      each dispute, a trained independent neutral reviews the evidence from both parties, invites fresh
      argument, and determines whether the feedback meets one of four criteria for removal. The
      process takes seven days and eBay removes the feedback pending the outcome. Operational
      only in the Netherlands, a novel crowd-sourcing resolution process for feedback disputes is
      available for one of eBay’s subsidiaries, Marketplaats. After arguments are exchanged, 21 ‘jurors’
      are randomly selected from a volunteer panel of experienced users of Marketplaats and shown
      the details of a dispute. The buyer is given 7 days to respond and the seller then has 2 days to
      rebut. The jurors, after that, have 10 days to review and they issue a decision as to whether the
      feedback should be withdrawn. Marketplaats acts in accordance with the majority decision.

Rechtwijzer 2.0 – www.hiil.org/project/rechtwijzer

4.3   Rechtwijzer 2.0 was developed for the Dutch Legal Aid Board by the Hague Institute for the
      Internationalisation of the Law (HiiL). The service is provided by the Netherlands Ministry of
      Justice and Security. It is designed to help parties resolve disputes through a process that takes
      them from problem diagnosis, through facilitated, Q&A-based framing of their case, to problem
      solving and assisted negotiation and, finally, to various forms of online ADR (alternative dispute
      resolution). To assist in negotiation, the process provides automated legal guidance, based on the
      answers parties have given during the Q&A session.The first service, now live, is for matrimonial
      disputes, including divorce and ancillary matters, such as custody and maintenance. Landlord and
      tenant and neighbour disputes are planned for the future. The ADR phase is reached on failure
      of the parties to reach a resolution by themselves. This takes the form of online mediation or
      arbitration. The process takes place online on a secure and confidential platform, designed for
      asynchronous dialogue. The platform enables the mediator to engage in separate confidential
      discussions with each party, consistent with normal mediation practice. Finally, as a ‘fail safe’
      against a resolution being reached that does not satisfy the criteria of ‘fairness’, agreements go
                                                                                                           Examples of ODR in action

      before an independent lawyer for confirmation.

Canadian Civil Resolution Tribunal – www.civilresolutionbc.ca

4.4   The Civil Resolution Tribunal is an online tribunal that is due to be launched in the summer of
      2015 in British Columbia, Canada. It is a public scheme, regulated under the Civil Resolution
      Tribunal Act 2012. The online tribunal will be available as an alternative pathway to the
      traditional courts for resolving small claims through a process that is expected to be more
      convenient and less costly. It will deal with claims (under 25,000 Canadian dollars) relating to
      debts, damages, recovery of personal property, and certain types of condominium disputes. It will

                                                                                                              12
not handle disputes affecting land. The online tribunal will operate in several stages. In the first
      instance, the facility will help users explore possible solutions. Then, parties will be required to
      use the tribunal’s online negotiation platform, which is subject to short timelines and supported
      by templates for statements and arguments. If a settlement is not reached, then a tribunal case
      manager will be appointed to assist the parties to settle their dispute through a mediation process
      that will take place online or over the telephone. If parties do not settle by this mediation process,
      they will then be invited to agree to a third and final stage of adjudication. The adjudicator will
      contact the parties via the online platform, over the phone, or, when necessary, through video-
      conferencing, and then will make a decision that will be final and binding.

Financial Ombudsman Service - www.financial-ombudsman.org.uk

4.5   The UK Financial Ombudsman Service was established by statute in 2000 as the mandatory
      ADR body in the financial services sector. Its function is to resolve disputes between consumers
      and UK-based financial businesses quickly and with minimum formality. Its casework process
      is designed around the principle that a dispute is usually best resolved at the earliest possible
      stage and that most problems can be resolved without needing a formal determination by an
      ombudsman. Businesses covered by the ombudsman have the opportunity to resolve disputes
      before the service becomes involved, but they must resolve complaints promptly – and always in
      fewer than eight weeks. Once a complaint is referred to the service, its process is geared towards
      early and informal resolution. Its case-handlers (‘adjudicators’) attempt to facilitate an amicable
      resolution to the dispute between the two parties, usually resulting in adjudicators writing to
      parties with their view on what the fair and reasonable outcome should be. If both parties agree
      (which typically happens in around 90% of cases), the dispute is resolved. But either party may
      disagree and ask for the case to be referred to an ombudsman for final, binding, determination.
      The service has trialled new ways of working that will allow some disputes to be settled even
      more informally and quickly - that is, in hours and days. An ombudsman’s determinations
      can be accepted or rejected by a consumer, but if a consumer accepts the decision then it is
      binding. These decisions are not appealable, but are subject to judicial review. In 2013/14, the
      Financial Ombudsman Service resolved 518,778 disputes, of which 487,749 were resolved by
      adjudicators and 31,029 by ombudsmen.The service is a ‘distance’ service, so that each year there
      are usually less than 20 face-to-face meetings with adjudicators or ombudsmen.The average cost
      per case for 2014/2015 is expected to be £567.
                                                                                                               Examples of ODR in action

Nominet - www.Nominet.org.uk

4.6   Nominet is a domain name registry company which has run the .uk domain name since 1996
      and has run the .cymru and .wales domain names since September 2014. Nominet has to
      register .uk domain names on a ‘first-come, first-served’ basis - without examining the merits
      of the application. It therefore established a Dispute Resolution Service (DRS) to provide a
      means of resolving .uk domain name disputes without recourse to court. To pursue a claim
      through the DRS, complainants have to demonstrate that they have rights in a name that is the
      same or similar to the disputed domain name and that the registration has been abusive (for

                                                                                                                  13
example, the spelling of a domain name is deliberately very similar to the complainant’s in order
      to confuse Internet users). The first stage of the DRS requires a complainant to complete a
      form on Nominet’s website. This includes specifying what remedy is being sought (the most
      common remedy is the transfer of the disputed domain name to the complainant). The material
      submitted by the complainant is then sent to the registrant of the domain name. Nominet then
      appoint a mediator, who contacts both parties by telephone to seek a solution. The majority
      of cases settle at this stage and the mediation generally takes around two weeks. There is no
      cost to either party at this stage. If the case does not settle via mediation, the complainant can
      pay to have an independent expert appointed. The expert’s decision will be based solely on
      the materials submitted by the complainant and the registrant. Appeals from the expert stage
      are permitted, but rare. Both the expert’s decision and that in any appeal are published on the
      Nominet website.

Resolver - www.resolver.co.uk

4.7   Resolver is a UK-based online facility that helps consumers raise complaints with suppliers and
      retailers. The operators of the site have populated it with the e-mail contacts of the complaint
      departments of over 2000 major organizations. Through a form-filling exercise and helped by
      the provision of standard phrases, a consumer is given online assistance in drafting a complaint.
      This is then e-mailed directly to the relevant complaint department. The suppliers and retailers
      are urged to respond to the Resolver e-mail address so that the exchange of messages can be
      stored on the consumer’s case file that is then maintained on the site.The service presently covers
      energy, telecoms, transport, loan companies, restaurants, high street shops, solicitors, and many
      more sectors. Resolver provides a platform through which parties can discuss their differences
      in a structured way. Emoticons are provided to help consumers better express their emotions.
      The service hold details of the escalation procedures of the 2000 organizations and guides users
      from first-tier complaints handling up to the highest level. Users are alerted by e-mail to any
      responses and are prompted to escalate when responses are not received. The service is free of
      charge, both to consumers and to the organizations to whom they are complaining.

Youstice - www.youstice.com
                                                                                                              Examples of ODR in action

4.8   Youstice is an ODR service for handling large volumes of low value consumer complaints,
      relating both to goods and services, whether or not the purchases took place online.There are two
      tools. The first enables negotiation between parties. It provides assistance in framing arguments
      – parties are invited to describe their position by selecting from a series of phrases, with relevant
      icons for each. The site also suggests suitable solutions that again can be represented by icons. A
      form of structured (asynchronous) dialogue can take place within a limited area for free form
      comment. The objective is to encourage and facilitate the parties to reach an agreed settlement
      directly between themselves. Using the second tool, customers can escalate cases and seek an
      independent review by one of a number of neutrals accredited by Youstice. Customers can file
      their claims either directly at the retailers´ websites or at websites of consumer organizations.
      Shops are entitled to use the Youstice logo if they reach agreement on Youstice with consumers

                                                                                                                  14
in at least 80% of cases and they implement at least 98% of the agreements reached or of
       decisions by third-parties. Use of the facilitated negotiation platform is free to consumers, with
       Youstice earning its income from the retailers who pre-register and who display the Youstice
       logo in their marketing.

Online Schlichter - www.online-schlichter.de

4.9    The Online Schlichter is an online mediation service for Business-to-Consumer e-commerce
       and direct selling disputes. It has been run by the German-French European Consumer Centre
       (ECC) in Kehl/Strasbourg since 2009 and has been financed by the Ministry of Justice/
       Consumer Protection of six regional governments of Germany. Its aim is to increase access to
       justice and reduce the number of cases reaching the regular courts. It has also received funding
       from legal insurance and standard bodies (Trusted Shops and DEVK) and the direct selling
       association, a membership body (Bundesverband Direktvertrieb). The service is free for both
       parties and the mediators/advisors are independent lawyers at the ECC. There is considerable
       emphasis on analyzing the case from the start and providing both parties with legal advice and
       evaluation of their legal position, thereby correcting any unfounded expectations about their
       rights. This online advice is partly automated by using textual building blocks and decision
       trees. This up-front advice and evaluation often helps to achieve early settlement. The mediator
       makes a non-binding recommendation. In about two-thirds of all cases both parties accept the
       recommendation and the case is settled accordingly. In 2014 around 1500, cases were filed with
       the Online Schlichter (1142 in 2013, and 859 in 2012). The average duration from filing to
       acceptance of the recommendation is 60 days. About 28% of cases deal with the non-delivery
       of goods, 21% of cases concern defective goods, and 17% of disputes concern consumers
       withdrawing from a contract. Its high settlement rate attests to the success of this technique for
       small claims.

Cybersettle - www.cybersettle.com

4.10 Cybersettle, based in the US, developed software to provide ‘blind bidding’ services. This is a
     process designed to speed up negotiation when all that is in dispute is how much is owed. In
     broad terms, the claimant and defendant each submit the highest and lowest settlement figures
                                                                                                            Examples of ODR in action

     that would be acceptable to them.These amounts are not disclosed but if the two ranges overlap,
     a settlement can be achieved, the final figure usually being a split down the middle. It is claimed
     that Cybersettle handled over 200,000 claims of combined value in excess of $1.6 billion, and
     that the City of New York used the system to speed their settlement process for a backlog of
     40,000 personal injury claims. More than 1,200 claims were submitted and it is claimed that
     there was a 66% settlement rate within 30 days of submission, savings in litigation costs of
     $11.6 million, with an average reduction of settlement time of 85%. Similar systems have been
     developed in the past, such as The Mediation Room in the UK. However, when Cybersettle
     obtained a worldwide patent, some competing systems closed down. While the current status of
     Cybersettle is unclear, a new blind bidding service, TryToSettle.com, was launched in 2014 in
     the USA, under a licence granted by Cybersettle. A Canadian company, SmartSettle.com, offers
     a simpler staged bidding version of blind bidding.

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Modria - www.modria.com

4.11 Modria is a spin-off from the ODR departments of eBay and PayPal and was formed by the head
     of those departments, ODR pioneer, Colin Rule, who led the team that built the online dispute
     resolution system that is used so extensively by eBay (see Paragraph 4.2) and PayPal. Modria
     provides a cloud-based platform on which businesses and public bodies can customize and build
     their own ODR services. It supports various ODR methods, including diagnosis, negotiation,
     mediation, and arbitration, and also offers a configurable case management and workflow system
     that handles case intake, document generation and management, scheduling, reporting, and
     status messaging. By using Modria, therefore, governments need not design and develop their
     own ODR technology. Modria has ISO 27001 certification for information security and its
     processes and technology resolve hundreds of thousands of disputes each year, for clients such
     as the American Arbitration Association (road traffic accident cases), the Dutch Legal Aid Board
     (Rechtwijzer – Paragraph 4.3), Marketplaats (see Paragraph 4.2), and leading e-commerce and
     payments companies.

Traffic Penalty Tribunal - www.trafficpenaltytribunal.gov.uk

4.12 The Traffic Penalty Tribunal (TPT) of England and Wales has recently launched a web-based
     portal BECK (Best Evidence Cloud Knowledge), for use by appellants, respondent authorities
     as well as the adjudicators and administrators. The Portal enables appellants to appeal, upload
     evidence and follow cases and hearings under one evidence screen and account. Likewise, each
     authority has a dashboard showing current cases, enabling them to submit evidence, comment,
     and follow progress of hearings and decisions. Appellants create an account and receive all
     notifications by email. They comment on evidence, request their preferred hearing type and
     follow progress of the case through to the decision, viewed online. Their dashboard displays the
     status in each case, prompting actions. The TPT administrators, who no longer data-input, now
     focus on customer service, for example, ‘offline’ appellants phoning for a form or help. TPT’s
     workload, which will shortly increase by 30%, will be administered by the same staff numbers
     with reduced case closure times. Adjudicators can manage their own caseload, send directions to
     parties, and easily see uploaded evidence, including videos, which is also displayed to all parties.
     At telephone conference hearings all participants can view the same evidence, guided by the
     adjudicator.
                                                                                                            Examples of ODR in action

                                                                                                                16
5. Rethinking access to justice
5.1   Most civil justice reforms that are proposed by judges and policy-makers focus on
      improving dispute resolution and on streamlining the conventional court system.
      Improving access to justice has come to mean improving the way disputes are resolved
      – for example, by making the process quicker, cheaper, less combative, and easier to
      follow. Our Group takes a wider view of what is needed to increase ‘access to justice’.

Beyond dispute resolution

5.2   Informed by the case studies in the previous section and numerous other ODR systems around
      the world, and drawing also on some published work on the subject2, we suggest that access to
      justice is better conceived under three headings:

      • dispute resolution;

      • dispute containment;

      • dispute avoidance.

5.3   In suggesting this subdivision, we are claiming that to improve access to justice we should do
      more than ensure that judges in courts are affordable and available to resolve disputes. It is
      also vital that we can help prevent disagreements that have arisen from escalating excessively
      (frequently, it is lawyers as well as the parties who need to be contained); and, furthermore, that
      we find ways of preventing legal problems from arising in the first place (putting a fence at the
      top of a cliff rather than an ambulance at the bottom). The diagram below shows these three
      elements and the superimposed triangle, representing the state’s current provision of justice
      services, suggests that it focusses far more on resolution (courts and judges) than on containment
      and avoidance.

      Emphasis of the state -
      today
                                                                                                            Rethinking access to justice

                                               dispute avoidance

                                             dispute containment

                                              dispute resolution

2      Richard Susskind, Tomorrow’s Lawyers (2013).

                                                                                                               17
Extending the work of our courts

5.4   Paradoxically, at a time when saving costs is a government priority, we propose that the courts
      extend their scope - beyond dispute resolution to include both dispute containment and dispute
      avoidance. Our assumption is that better containment and avoidance of disputes will greatly
      reduce the number of disputes that need to be resolved by judges.

5.5   This could be the legal world’s ‘fluoride moment’ – just as putting fluoride in the water in
      the 1950s radically reduced the need for dental work on tooth decay, then, similarly in law,
      appropriate investment in containment and avoidance should greatly reduce the number of
      cases coming before our courts. Prevention should be better than cure. We propose two online
      techniques for this purpose: online facilitation to support dispute containment; and online
      evaluation to support dispute avoidance. These will complement the work of online judges but
      will generally be invoked before judges become involved.

5.6   The nature of the processes involved in each of our three categories will be quite different.
      Very broadly speaking, online judges will continue to work within an adversarial system of
      dispute resolution, online facilitation will embrace a more inquisitorial method, while online
      evaluation will be informational in style and approach. Much more can and should be said on
      this categorization. For now, we intend simply to give a flavour of the differences.

5.7   The diagram below sets out a proposed new approach for the state, based on the broader view
      of access to justice outlined above. By advocating greater emphasis on dispute avoidance and
      containment, it turns traditional thinking on its head.

      Emphasis of the state -
      proposed
                                         dispute avoidance
                                         online evaluation
                                           informational

                                        dispute containment
                                                                                                           Rethinking access to justice

                                         online facilitation
                                            inquisitorial

                                         dispute resolution
                                           online judges
                                             adversarial
5.8   In summary, the approach recommended here is not just to streamline conventional courts to
      save costs and increase access. It is to embrace a more preventative philosophy. For this purpose,
      we need an architecture for HMOC that is quite different from the set-up in conventional
      courts.

                                                                                                              18
6. Principal recommendations in further detail
6.1   In this section, we expand upon the principal recommendation of Section 3, namely, that
      HMCTS should establish a new, Internet-based court service, known as HM Online Court
      (HMOC). Building on the ODR case studies in Section 4 and the extended idea of access to
      justice laid out in Section 5, we recommend that HMOC should be an integrated, three-tier
      service, as depicted in the following diagram.

       Emphasis of the state -
       proposed                            dispute avoidance
                                           online evaluation                      Tier 1
                                             informational

                                         dispute containment
                                          online facilitation                     Tier 2
                                             inquisitorial

                                           dispute resolution
                                             online judges                        Tier 3
                                               adversarial
      In this section, we are restricting our proposal to what we call ‘first generation’ ODR systems.
      In Section 8, we indicate what the second and third generations might look like.

Tier One – Online Evaluation

6.2   The function of Tier One of HMOC will be to help users with grievances to evaluate their
      problems, that is, to categorize their difficulties, and understand both their entitlements and the
      options available to them. This will be a form of information and diagnostic service and will
      be available at no cost to court users. This part of HMOC will be shared with or will work
      alongside the many other valuable online legal services that are currently available to help users
      with their legal problems. For example, systems developed by charitable bodies or provided by
                                                                                                               Rethinking access to justice

      law firms on a pro bono basis will either sit within HMOC or be linked to the service. The
      broad idea of online evaluation is that the first port of call for users should be a suite of online
      systems that guide users who think they may have a problem. It is expected that being better
      informed will frequently help users to avoid having legal problems in the first place or help them
      to resolve difficulties or complaints before they develop into substantial legal problems.

Tier Two – Online Facilitation

6.3   If problems are not resolved through this initial online evaluation, then users proceed to a
      second stage – online facilitation. At the heart of this will be trained and experienced facilitators,

                                                                                                                  19
working online, who can review papers and statements from parties, and then help them by
      mediating, advising, or encouraging them to negotiate. A mix of ADR and advisory techniques
      will be used.The process will be actively led by the facilitators in a, broadly speaking, inquisitorial
      rather than adversarial manner. This facilitation is in the spirit both of ADR (alternative dispute
      resolution) and of EDR (early dispute resolution). They will not be binding but we expect
      the outcomes to be accepted in many cases. This approach is inspired partly by the work of
      Adjudicators who work in the Financial Ombudsman Service (see Paragraph 4.5). These are
      individuals who manage to dispose of 90% of the Service’s workload, so that only 10% of
      cases reach the ombudsmen. We anticipate a similar filtering on HMOC – that the facilitators
      will bring many if not most disputes to speedy, fair conclusions without the involvement of
      judges. The facilitators will be supported where necessary, by telephone conferencing facilities.
      Additionally on Tier Two, there will be some automated negotiation, which are systems that
      help parties resolve their differences without the intervention of facilitators. Users of Tier Two
      will incur a court fee, significantly lower than that charged on Tier Three.

Tier Three – Online Judges

6.4   Tier Three will provide a new and more efficient way for judges to work. Online judges will be
      full-time and part-time members of the Judiciary, who decide suitable cases (or parts of cases)
      on an online basis, largely on the basis of papers submitted to them electronically, as part of a
      structured but still adversarial system of online pleading and argument. This process will again
      be supported, where necessary, by telephone conferencing facilities. The decisions of online
      judges will be binding and enforceable, enjoying the same status as decisions made by judges in
      traditional courtrooms. A court fee will be payable but much lower than in today’s courts. Aside
      from making judicial services available at a lower cost, this will provide a new, more flexible
      career option for the Judiciary.

HMOC

6.5   The establishment of HMOC will require (and offer the opportunity for) the creation of a
      new body of court rules and practices. In tone and content, these should be consistent with the
      broader aspiration of a court service that is intelligible, accessible, speedy, and proportionate in
                                                                                                                Rethinking access to justice

      cost. This, in turn, calls for rules that are simple, clear, and compact. There is also scope here for
      embedding the rules in the ODR system itself, so that, for example, when users complete forms
      online, the systems will require that this is done in a compliant way and any consultation will
      proceed only when formalities have been met.

6.6   One way of looking at the diagram in Paragraph 6.1 is as though the inverted triangle is a funnel
      or filter, with only a relatively few cases proceeding through to the online judges. Here is where
      the efficiencies and cost savings lie in HMOC – cases are handled by lower cost facilitators
      rather judges and those cases that do reach judges will be handled at less expense because they
      will not involve court buildings with their associated operating costs. At the same time, the broad

                                                                                                                     20
base of the triangle represents greater access to justice with many more citizens being helped
       with their problems.

6.7    As a dispute service, Tier Two and Tier Three will be the core of HMOC. One innovation here
       is bringing an ADR-like procedure into the court system itself. This contrasts with traditional
       ADR, which, historically, has been separate and outside the courts, as an alternative to traditional
       litigation. Facilitation is conceived as complementary to the work of judges, filtering out disputes
       that can be solved by compromise, negotiation, or early legal insight. This should help avoid the
       costs and often the profound ill will between the parties that full-scale litigation can generate.
       As suggested, facilitation can therefore be regarded as an online form of early dispute resolution
       (EDR), which is generally taken to involve similar non-binding techniques to ADR (including
       negotiation, early neutral evaluation, conciliation, mediation, and so forth).

6.8    This HMOC process is integrated from the disputants’ perspective in two senses: first, that all
       three tiers will be accessible on the same platform and, second, that the three tiers should be
       managed as one coherent system with fully integrated databases and software. The purpose of
       this integration, once again, is to help achieve settlement at the earliest opportunity.

6.9    We suggest HMOC should have a procedure whereby online judges have the discretion to refer
       cases to the conventional court system - where, for example, there is an important issue of legal
       principle involved or where it is considered that the credibility of witnesses or evidence would
       be better judged in a physical courtroom. We also suggest that decisions made by online judges
       should be subject to the same rights of appeal as equivalent decisions made in the conventional
       court system.

6.10 Although HMOC may be regarded and managed as a new division in the court system, its
     jurisdiction will not be like that of a physical court. Nor will it fully replace any existing court.
     While we anticipate that HMOC will have full jurisdiction over some types of dispute, we also
     expect, for other types, that parties will have the option to choose between HMOC and the
     conventional court system. Finally, we predict that, for more complex disputes, some parts of the
     process will be settled in the traditional court system and setting, while other parts of the same
     dispute – for reasons of speed and cost - will be handled in HMOC.
                                                                                                              Rethinking access to justice

                                                                                                                 21
7. Pilots
7.1   In Paragraph 2.6, in one of our supporting recommendations, we call for the piloting of ODR.
      This is a crucial next step and we say more on the subject in Paragraph 10.2. With regard to
      selecting the pilots themselves, our initial thinking is that two broad categories of dispute should
      be selected: first, where there are already high volumes of the chosen type of case in our courts;
      and, second, where there are large volumes of a type of problem that are not currently being
      resolved. In this way, we can explore whether ODR can deliver cost savings and increase access
      to justice. We expect that parties would be asked to volunteer to use the pilot services.

7.2   Our Group looked at several types of dispute as candidates for piloting and, in particular, at small
      claims, road traffic claims, and housing disputes. For the purpose of this report, we have selected
      small claims as an illustration.This category of claim falls into our first grouping above.There are
      great volumes of small claims in the courts today and we can envisage savings and improvements
      from allocating some of these cases to HMOC. In selecting small claims for discussion, we are
      not definitively suggesting that this should be formally piloted. Our purpose instead is to give a
      sense of why ODR is relevant and how it might work in practice.

Small Claims

7.3   The current ‘small claims track’ in the civil court system is designed for less complex cases -
      those usually up to a value of £10,000, and personal injury and housing disrepair claims up to a
      value of £1,000. Small claims cases make up almost 70 per cent of the total number of hearings
      in the civil courts, even though the number of small claims going to hearing has decreased over
      the past 10 years from 51,046 in 2003 to 29,603 in 2013. Despite the simplified and informal
      procedures, it can take more than six months for a small claims case to reach a hearing before a
      judge.

7.4   To reduce the number of small claims currently going through the courts, the Department of
      Constitutional Affairs (now the Ministry of Justice) launched a pilot in 2005 of a free Small
      Claims Mediation Service (SCMS) to try and reduce the time and expense of attending court.
      HMCTS now employs 17 mediators and several additional support staff, at a cost of approximately
      £1.2m, as part of a nationwide service to offer mediation at no cost to parties involved in small
      claims disputes. SCMS is available for all small claims except personal injury claims, road traffic
      accidents, and housing disrepair cases. Cases with a value of up to £10,000 per year are now
      automatically referred to mediation, where both parties indicate this is acceptable. Otherwise,
      cases are recommended for mediation by the judge. The service yielded an estimated judicial
      time saving of 6170 hours between April 2014 and October 2014. If the mediation is successful
                                                                                                             Pilots

      and a case does not proceed to trial, the time to settlement figure can be reduced to 20 weeks.

7.5   Some private providers in the UK also offer useful help for those with small claims level disputes
      (for example - http://www.small-claims-mediation.co.uk). These offer useful and innovative

                                                                                                              22
approaches but can cause some confusion for claimants, who are perhaps unclear about the
        different charging models, the different processes, and whether a given service is state-supported
        or indeed trustworthy.

7.6     It is our Group’s view that ODR could improve our court-based system for resolving small
        claims. HMOC could bring further savings in cost and time. By channeling small claims through
        an ODR pathway, we would encourage parties to resolve their cases at the earliest possible
        opportunity and empower these court users to find solutions without judicial involvement. It
        would be a less daunting and more user-friendly process, a clearer pathway through the justice
        system. An example of a more user-friendly approach to small claims is operational in British
        Columbia and can be viewed at www.smallclaimsbc.ca.

7.7     In operation, a pilot of HMOC for small claims could be initiated by asking those involved
        in defended claims whether they wish to take part in an ODR pilot via the Directions
        Questionnaire (N180). At Tier One, there would be guidance and management of expectations,
        explaining how and when things are done in HMOC.There could be advice on how to achieve
        possible settlement without expert help, identification of appropriate options for resolution of
        different types of small claim (for example, housing, debt, business claims), and links to online
        resources of other advice agencies. At Tier Two, HMOC would differ from SCMS in two ways.
        First, the facilitation, in the first instance at least, would be online (telephone conferencing could
        follow, if necessary). Second, the facilitators would tend to be more inquisitorial, participative,
        and advisory than the current mediators. We expect these two changes would result in more
        disputes being settled at this stage. On Tier Three, the online judges would resolve the claims on
        the papers. This may be supplemented by some telephone conferencing, if deemed appropriate.

7.8     The three-tier service of HMOC would not simply computerize the existing small claims
        mediation service. Instead, it would offer a more integrated service and, on Tier One, it would
        help users more fully to understand their problems and options. Any ODR pilot would need
        to be evaluated against the existing scheme in the same manner as the initial small claims pilots
        which were a forerunner to the current scheme3.
                                                                                                                    Pilots

3       S Prince and S Belcher, An Evaluation of the Small Claims Dispute Resolution Pilot at Exeter County Court
(Department of Constitutional Affairs, 2006).

                                                                                                                    23
8. Future systems
8.1   It was part of our brief to consider likely future developments in ODR, with particular reference
      to emerging technologies.We refer here to our working papers on this subject.These are available
      on our website. In summary, we look at four categories of future system in these papers:

      • systems to help analyse legal problems;

      • systems to assist in negotiation;

      • systems to assist in decision-making;

      • systems that make decisions.

8.2   We identify a number of enabling techniques and technologies that we predict will bring
      advances in each of these four categories.These include artificial intelligence, ‘big data’, affective
      computing, crowd-sourcing, machine learning, what-if analysis, and virtual meeting rooms. The
      technical details and precise systems are less important in this context than the need to recognize
      that there is no finishing line in the world of IT. Whether or not our specific predictions
      about future directions turn out to be accurate, it seems to us very unlikely that the supporting
      technologies will not evolve at all. Given the advances we are witnessing across the IT and
      Internet worlds generally, we think it safe to assume that ODR systems will become steadily
      more useful and powerful.

8.3   We translate this assumption into the expectation that two further generations will follow the
      first generation systems that are proposed for HMOC in Sections 2 and 6.

8.4   The main characteristic of what we call ‘second generation’ ODR systems will be the addition
      of video technology. By the time this is fully introduced in HMOC, we expect this to be a form
      of ‘telepresence’ (systems whose sound and video quality is so high that users feel as though they
      are in the same room as those with whom they are engaging). In crude terms, this will be like
      adding a very high quality of Skype video call to the ODR service and this will replace the
      telephony that will be used in the first generation. In this way, users will have video conferences:
      in Tier One (Evaluation) perhaps with advice counselors or pro bono advisers; in Tier Two
      (Facilitation), with specialists who are, for example, mediating or offering neutral views on
      legal merits; and, in Tier Three (Judges), directly with judges (in a suitably designed online
      environment).
                                                                                                               Pilots

8.5   The third generation of systems, which we can expect to be in widespread use in the 2020s (and
      in occasional use much sooner), will be those that are enabled by AI (artificial intelligence). In
      Tier One, these will provide a question-and-answer session with users and offer some kind of
      legal diagnosis and perhaps draft an appropriate document in support. For certain categories of

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